Fundamental Headlines • Chrysler Workers Fret as Deadline for Buyouts Nears – Wall Street Journal • BHP Billiton Withdraws Rio Tinto Bid – Wall Street Journal • World Bank says crisis will slow China – Financial Times • Citigroup to Keep Emerging Market Assets, Focus on Growth, Crittenden Says – Bloomberg • Axa Reduces Annual Earnings Forecast, Says Long-Term Targets Are Obsolete – Bloomberg • EURUSD – The final GDP reading for Germany showed that economic growth contracted 0.5% in the third quarter, confirming that Europe’s largest economy is heading into a technical recession. The breakdown of the report showed that private consumption was revised higher to 0.3% from an initial reading of -0.6%, while government spending fell to 0.8% from 0.9% in the advanced reading. In addition, imports surged to 3.8% from -1.4%, while exports fell to -0.4% from -0.2%. The data certainly portrays a dour outlook for Germany as demands from the global economy falter, and deteriorating fundamentals may lead the European Central Bank to lower borrowing costs further as price pressures alleviate. Meanwhile, the German GfK consumer confidence index unexpectedly increased for the third consecutive month to 2.2 from 1.9 in November on the back of falling energy costs. Cheaper oil prices outweighed growth concerns as consumers raised their outlook for the economy, but the optimistic mind-set among constituents could be short lived as Europe’s largest economy heads into its worst recession since 1996. Discuss the topic and your trade ideas in the EUR/USD Forum. • GBPUSD – Mortgage approvals in the U.K. fell to 21,584 from a revised reading of 23,383 in September as credit conditions remain far from normal. The downturn in the global financial market paired with tightening credit conditions continues to take a toll on Europe’s second largest economy, and conditions may only get worse as home prices fall further. Meanwhile, business investments in the U.K. fell 0.2% in the third quarter despite expectations for a 1.9% decline. The data suggests that economic activity will remain subdued well into 2009 as the economy heads into a recession, which could force the Bank of England to lower borrowing costs even further as growth prospects deteriorate. Market participants have already raised bets that the BoE will deliver a 50bp cut at the December 4th policy meeting, which would lower the benchmark interest rate to 2.50% from 3.00%. Discuss the topic and your trade ideas in the GBP/USD Forum. • USDCHF – The UBS Swiss consumption indicator slipped to a three-year low of 1.316 from a revised reading of 1.642 in October, which suggests that private-sector consumption will weaken in the months ahead as economic activity deteriorates throughout Europe. The downturn in the U.K. and Euro-Zone has certainly taken a toll on Switzerland, and conditions may only get worse as the Swiss National Bank expect growth to contract in 2009. Just last week, we saw the central bank take a preemptive approach to stave off further downturns in the economy as they unexpectedly lowered the 3-month LIBOR rate by 100bp to 1.00% from 2.00%.The extraordinary efforts by the central bank should certainly help to support growth over the coming months, but conditions may get worse as fears of a global meltdown intensify. For more news and resources, visit the new Swiss franc Currency Room.